Fonterra will restructure winter milk premium agreements
Fonterra chief executive Richard Allen announced the changes during the co-operative’s presentation of its 2026 annual financial results. The company said changes in farm management have led more suppliers to continue milking into autumn and winter without formal winter-supply commitments.
The operational changes will mainly affect Northland and Waikato, New Zealand’s principal winter-milking regions. Processing plants in those areas require minimum volumes of milk outside the main season. Anne Douglas, Fonterra’s group director for Farm Source, said existing winter-milk agreements would continue unchanged through the winter of 2027.
Fonterra will create a farmer advisory group to help determine volume allocations during the move to a single winter-supply system. The co-operative said the number of contracted winter suppliers had stayed broadly stable, while total winter deliveries from contracted and non-contracted farms had increased substantially.
Under the proposed Winter Supply Agreement, participating farmers will opt in each year and meet specified volume targets and collection requirements. The arrangements are intended to secure the fluid milk needed for specialised consumer and foodservice commitments during the Southern Hemisphere winter while limiting deliveries that do not match planned manufacturing schedules.
Fonterra did not disclose the value of the existing premiums, citing commercial sensitivity. It described the payments as a distinct part of total supplier distributions. The company said the revised structure would direct seasonal incentives towards defined supply agreements and reduce payments on milk that farmers are already producing without contractual commitments.
John Stevenson, chair of the Fonterra Co-operative Council, said the transition would require suppliers to make operational changes but would provide time for them to adjust. Farmers receiving uncontracted premiums will need to decide by 2028 whether to alter herd dry-off dates or join the new agreement. Suppliers with legacy contracts will have until 2033 to revise calving schedules, pasture-renovation plans and farm investment decisions.
